Wednesday, 25 November 2009

Another financial story

The Supreme Court ruled in favour of the banks today in the case which has been rattling around the Courts for over two years. The investigation into unauthorised overdraft fees started with the launch of a test case in 2007; millions of claims were put on hold by the banks whilst the test case was decided; thousands of other claims weren't even submitted whilst the outcome of the case was awaited.

Commentators and observers prophesied that without these charges there would be an end to the current free banking system.

This ruling is unlikely to see the end of the controversy, however, as it is likely that the OFT will start looking into other routes (this case hinged on unfair contract terms) to see if money paid in charges can be recovered.

That's the press. What about the real story? I am perched firmly on the fence on this one. On the one hand, when you sign up to your bank account you agree to these terms and conditions (although you may not have actually bothered to read them!) so when the charges are incurred it really ought not to come as a surprise.

I've suffered from them myself (and indeed would have joined the queue for reclaiming them had my bank not refused to consider looking into it until this case was decided). The complaint is not so much with the charges but rather the scale of the charges.

Example: several years ago I had an agreed overdraft on my account (which I used on a monthly basis); at this time I was receiving monthly (?) statements - or rather not receiving them, as although the bank claimed that they were posted they rarely arrived with me. I don't use Internet banking (I can never remember the huge amount of security information required to log onto my account) - this meant that I rarely had any idea of how much money was in my account; or rather how far into my overdraft it was. Towards the end of the month I exceeded my overdraft by a few pounds (maybe even pence) - charges ensued; further into my unauthorised overdraft and direct debit payments are bounced - further charges ensue. The cost of lack of a few pounds - well over £60. This means that the next month I am £60 nearer reaching the unauthorised limit; and the next month even nearer, etc. etc. etc. This went on for several months. The bank refused to extend my overdraft limit; even though I pointed out the situation (and the fact that they were exacerbating the situation).

Now I admit in the above that I was at fault, and so I remedied the situation by changing the date of direct debits so that they came out at the start of the month; the bank solved their problems getting my statements to me.

What annoyed me (apart from the fact that it cannot possibly cost them £30 to not pay a direct debit) was that they will not try and work with you. Recently I got a print out from the cashpoint and discovered that my account was overdrawn (something that has not happened for a very long time). Being a responsible account holder I rang my bank, knowing that they had reduced my overdraft three times in six months - to make sure that I wasn't going to exceed my limit. I probably was, it transpired, by the time that pending payments were made. Could I increase the limit (even temporarily) to ensure that this didn't happen. No. I didn't ignore the situation, I asked for help - and the bank effectively stuck two fingers up at me. The biggest insult of all - my account isn't even a free account! I pay £15 a month for my account!